Canada Employment Insurance Financing Board: Is Its End In Sight?

In the  second Budget Omnibus Bill related to the 2012 Budget, the Government proposes to suspend the operations of the Canada Employment Insurance Financing Board (CEIFB) until such time the Employment Insurance (EI) Operating Account returns to balance.  According to the 2012 Budget, this is not expected until 2016. Is this the end of the CEIFB? Lets hope so.

The CEIC was established in 2008 to “set EI premium rates for the upcoming year in a transparent fashion”. This has never happened. In every year since its creation, the Government has overridden the rate recommended by the CEIC through an Order-in-Council. In the March 2012 Budget, the Government proposed further changes to the EI rate-setting process. The employee EI rate is now to be limited to a 5 cent per year increase until the EI Operating Account is balanced.  This precludes the CEIFB from setting rates for at least another four years.

Once the EI operating Account returns to balance, the CEIFB is to set the rate on a seven-year rolling basis.  The CEIFB is to set a rate for each year that would generate enough premium revenue over the next seven years equal to the forecast cost of the EI program during that period.  The requirement to maintain a $2 billion has been eliminated.  However, the Government still retains the right to set its own rate.

We have consistently argued that the CEIFB was created solely to provide cover for the Government to write-off the notional $57 billion surplus recorded in the EI Account at that time. Given that the Government retained its ultimate control over the setting of rates, and has done so since 2008, there was no need for the CEIFB. 

The Government has finally recognized this in the Omnibus legislation – in part at least – by suspending the CEIFB”s operations until at least 2016.  We would have hoped that the Minister of Finance would have gone further and put this irrelevant Corporation out of its misery forever.

In the 2012 Budget, the Government announced that it “will review the size and structure of the CEIFB to ensure that independent rate setting is done in the most cost-effective manner possible”. Little did we realize that this meant closing down the CEIFB for at least four years, especially when earlier on the same page, the Government stated that “ the CEIFB will continue to set the rate but the Government will limit rate increases to no more than 5 cents per year until the EI Operating Account is balanced”.

In tabling the second Omnibus Bill, the Minister of Finance told the Opposition that everything in the Omnibus Bill was in the Budget and that if they had spent time reading the Budget, they would have realized this. What he failed to say was one has to read between the lines of the Budget and question every sentence as to its meaning. Why didn’t the government simply say in the budget that the CEIFB would be closed down and the government would set the rate? 

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